Significance of Open Interest

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Open interest is the count of option contracts that have been opened and not yet closed or exercised. Unlike daily volume — which resets each day — open interest is a running total that accumulates positioning over time.

Three reasons open interest is more informative than volume:

  1. Persistence. A high-volume day with no change in OI is just rolling activity. A high-volume day with a big OI jump is new positioning.
  2. Pin risk. Strikes with very high OI tend to act as gravity on the underlying near expiration as market makers hedge.
  3. Stock direction signals. Sustained OI build at out-of-the-money calls (or puts) shows where smart-money positioning is concentrated.

Watch the daily OI change report alongside any volume screener — they answer different questions.